Transcript
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Trading Places An overview of World Economies Chapter 2International marketing Consuming Globally, Thinking Locally
by Andrew Macaulay
Narayan Kadel/ Ajeet SinghS - 54 / S 04
FMS PT 2011-14 Batch
August 2000
Submitted by:
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WHAT IMPACTS GLOBAL TRADE
Global Trade is impacted by the Macro events across economies and also by theinteraction of politics, economic and investment policies, state of technology and
institutions.
Global Trade witnessed a very steady and strong growth from 1950 to 1970.
Period from 1950 onwards witnessed a lot of shocks and adjustments.
Oil Crisis in 1970
Third World Debt Crisis in 1982
Collapse of Communism in 1989
Asian Crisis in 1997
Sub-Prime in 2008
EURO Zone Crisis 2010
GLOBAL TRADE Post the WW II Period
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Inspite of the shocks that the Global trade faced the World real GDP was able to
show increments YoY.
The Growth rates also moved in tandem with the shocks and a considerable dip
can be noticed in the 2009 pursuant to the Sub Prime.
GLOBAL TRADE Post the WW II Period (Historical Perspective)
World Real GDP
-
100.00
200.00
300.00
400.00
500.001
Trillions
Year (1961 - 2011)
GDPinUSD
SubPrime
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IMF projects the world output to slow down to 3.30 % in 2012 compared to3.79% in 2011 which is further decline from 5.10 % in 2010.
Current major Economic factors impacting World Trade
EUROZONE Crisis - most impacted countries -Greece, Italy, Spain, Portugal
Low demand from US (Largest consumer)
Sluggish domestic demand in the Emerging Markets
GLOBAL TRADE Current Scenario and Challenges
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Institutional Framework Global Players and Referees
1. WORLD BANK
Founded in 1944 as a cluster of 5 development institutions. International Bank for Reconstruction and Development (IBRD)
International Development Association (IDA)
International Finance Corporation (IFC)
Multilateral Investment Guarantee Agency (MIGA)
International Center for Settlement of Industrial Disputes (ICSID)
Headquartered in Washington D.C; 9000 employees and 100 offices globally.World Bank acts like a Cooperative with 188 member countries.
Objectives
The World Bank is a vital source of financial and technical assistance and
provides help to governments in developing countries to reduce poverty
Provides governments with money and technical expertise they need for
projects such as education, health, infrastructure, communications,
government reforms and for many other purposes.
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Institutional Framework Global Players and Referees
2.International Monetary Fund (IMF)
Founded in 1945 to oversee the international monetary system and to ensure
exchange rate stability and encourage its member countries to eliminate exchange
restrictions that hindered trade.
Objectives To promote International Monetary Cooperation.
Facilitate the expansion and balanced growth of International Trade.
Promote Exchange stability
Assist in establishment of a multilateral system of payments.
Make it general resources temporarily available to members experiencing balance
of payments difficulties. Shorten the duration, and lessen the degree of balance of payments of members.
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Institutional Framework Global Players and Referees
3. General Agreement for Trade and Tariffs (GATT) to
WORLD TRADE ORGANISATION (WTO)
Formed as General Agreement on Trade and Tariffs (GATT) in 1947 primarily
to avoid future conflicts among nations regarding trade.
Basic Principles of GATT Non Discrimination in Trade.
Domestic Industry should be protected only through Customs Tariff.
Dumping and Subsidies should not interfere with fair competition.
Tariffs should be reduced through multilateral negotiations.
In 1994 GATT had 118 members accounting for 80 % of the World Trade
GATT became WTO in 1995 formed out of the Uruguay round of negotiations of
1984 - 1986 and presently has a membership of 157 countries.
I tit ti l F k Gl b l Pl d R f
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What is WTO ?
WTO is an organization for liberalizing trade.
WTO is a negotiating forum for governments to negotiate trade agreements. WTO operates a system of trade rules and acts as a platform to resolve trade
disputes.
WTO also helps to protect consumers and also avoid spread of disease.
Functions of the World Trade Organisation (WTO)
Administer WTO trade agreements. Provide a forum for trade negotiations.
Handle trade disputes
Monitor National Trade Policies.
Provide technical assistance and training for developing countries.
Cooperate with other international organisations.
Multilateral Trading System (MTS) at WTO
These are WTO negotiated agreements entered into in consensus and
later ratified by the Parliaments of the respective countries.
These are contracts, guaranteeing member countries important trade rights.
The MTS also binds the governments to keep their trade policies within
agreed limits to everybodys benefit.
Institutional Framework
Global Players and Referees
4. WORLD TRADE ORGANISTION (WTO)
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OECD consists of 29 countries who support the principles of a market economy
Pluralist economy and respect for human rights.
Originally formed with 20 member countries from Western Europe and
North America in 1961 as Organization for European Economic Cooperation
which was formed to administer the Marshall Plan scheme for the
reconstruction of Europe
Key Aims Promote policies for achieving sustainable economic growth and employment
and a rising standard of living for the population.
Maintain financial stability and member countries to contribute to the expansion of
World trade on a multilateral and non discriminatory basis.
Undertake to cooperate with each other to ensure economic growth, reduction of
obstacles of trade in goods and services and liberalization of capital movements
to contribute to the economic development of all the worlds countries.
OECD also undertakes collection of economic statistics and dialogues with
non OECD members for the facilitation of trade.
4. Organisation for Economic Cooperation and Development (OECD)
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A number of regional trade agreements are in place across the world and have
notified to GATT and WTO.
Some of the regional trade agreements are
NORTH AMERICAN FREE TRADE AGREEMENTNAFTA
EUROPEAN UNIONEU
ASIA PACIFIC ECONOMIC COOPERATION FORUMAPEC
ASSOCIATION OF SOUTHEAST ASIAN NATIONSASEAN
LATIN AMERICAN INTEGRATION ASSOCIATIONLAIA
Supra National Trading Blocs
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ASEAN was formed in 1967 in Bangkok by 5 members Thailand , Malaysia,
Singapore, Philippines, Indonesia. The membership now stands at 10.
Key Aims
Accelerate Economic growth, social progress and cultural development
in the region.
Promote regional peace and stability.
Promote collaboration and mutual assistance on matters of common interest.
Training and research facilities in the educational technical and administrative
sphere.
Promote South East Asian studies.
Collaborate more effectively for the greater utilizations of the agriculture and
industries.
1. Association of South East Asian Nations (ASEAN)
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ROLE OF NATIONAL GOVERNMENTS
National Governments can play important roles in both
facilitating and restricting trade.
Some measures for Restricting the Trade
Tariff barriers - Duties and Taxes
Non Tariff Barriers - Quotas and Imports restraints, Govt nationalist policies,
Exchange rate controls, administrative and technicalregulation standards for products
Governments promoting the Trade
Govt support trade as it leads to overall economic and political benefits.
Govt support by way of information facilitation. Grants for Marketing research
Provide Export Credit insurance for exports to difficult markets.
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THE HUMAN CONTEXT
Importance
Constantly changing pace of development
In 1978, 1/3rd of entire workforce are in Centrally Planned economies
Only 10% in markets semi-detached from world economy
Another 1/3rdonly partially linked to Intl Trading System
On account of technological changes, the consequences are far reaching
than expected
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THE Fallouts
Insecurity Technological change
Decline of traditional social structures Affects both the rich and poor countries
Increased levels of Poverty
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To tackle Low incomes, poor working
conditions and insecurity
Need for
Sound domestic policy
Supportive international environment
Recommendations of World Bank-
1. Follow market based growth plans
2. Create a demand for labour3. Expand work force skills
4. Raise productivity
5. Open up trade and attract inward investment
6. Construct framework for labour policy
7. complements informal and rural labour markets
8. Supports collective bargaining
9. Protects the vulnerable10. Does not act in favour of better-off workers
11. Encourage as rapid as possible progress in transition
economies without excessive or permanent costs for labour
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The Manager
Skill to look differently
Willing to adjust to new and different conditions (Korey-1995)
To look at problems from multiple perspectives
Analytical ability and Creative thinking to be part of decision
making process.
Perspectives to be used for enhanced creative thinking
Technological- tech and rationality
Organizational- corporate organization, company structure and
social infrastructure
Personal- from the point of view of those affected
International-social responsibility of the transnational businesses,ethical basis, values and morality
Cultural- religion, language, educational and intercultural
dimensions
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The Manager
Market- not to be perceived as domestic or international
Requirement- integration of all marketing activities viz.
-Understanding, Creating, Communicating, delivering
- Innovative approaches reqd for managing in a global economy
Processes reqd for global thinking manager Conceptual/Strategical -(where to invest/divest, cost cutting,
labour costs)
Skills based ( case based mgmt education)
Requirements for global Manager-
Intercultural negotiating skillsAbility to read different markets in different cultural contexts
Ability to understand comparative politics
Ability to understand that cultural frameworks define markets,
pricing and competition
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The Employer
Expectations- to create wealth
Responsibility- thrusted social responsibility while operating
Internationally
Internal measures- Physical working conditions
Womens, multicultural and minority rights
Education and trg. Of employees
Industrial relations
External measures-
Community service Environmental protection
Packaging and its impact on pollution
Transmission of new values
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The Employer
Expectations- to create wealth
Responsibility- thrusted social responsibility while operating
Internationally
Internal measures-
Physical working conditions Womens, multicultural and minority rights
Education and trg. Of employees
Industrial relations
External measures-
Community service
Environmental protection Packaging and its impact on pollution
Transmission of new values
WHAT ORGANISATIONS DO
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WHAT ORGANISATIONS DO
Have people with geocentric attitudes
Have education outside the country of their birth
Who have attended student-exchange
programme
Proficient in more than one international
languages
Best investment- An International Board
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CONCLUSION
Macro trends of future
Globalisation
Shorter supply Chains
Technology Convergence
Drivers of Globalisation
Technology
Faster methods of transportation and
communication
Convergence of Customer needs
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Shorter supply Chains
Shorter Product Life Cycles
Diminishing Brand Values
Smarter and more demanding customers
Increased pressure on prices and financial results
New technology enabled distribution channels
Technology convergence
Transformation of market places
Creation of product and services
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THANK YOU
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